Lloyd’s of London reported solid financial results for 2024, showcasing its ongoing commitment to disciplined underwriting and profitable growth. The market achieved a profit before tax of £9.6 billion, which is a slight decline from £10.7 billion in 2023. Despite this drop, the company enjoyed a 6.5% increase in gross written premiums, totaling £55.5 billion, compared to £52.1 billion the previous year.
During a recent media briefing, Lloyd’s Chief Financial Officer Burkhard Keese emphasized the importance of maintaining underwriting discipline. He noted that the combined ratio for 2024 stood at 86.9%, up from 84.0% in 2023. A combined ratio below 100 indicates that the company is making an underwriting profit.
Keese and Chief Executive Officer John Neal highlighted their commitment to improving performance over the past seven years. Neal stated that the company has focused on modernizing its operations and addressing costs, which has resulted in a significant reduction in the underlying combined ratio from 93% in 2018 to 79.1% in 2024. This improvement allows Lloyd’s to absorb substantial losses while still maintaining profitability.
The attritional loss ratio, which reflects the losses directly controlled by underwriters, has also improved, now sitting at 47.1%. Operating expenses have decreased from 40% in 2017 to 34% in 2024, although the expense ratio remained flat compared to the previous year, which Keese described as a minor disappointment.
Both executives stressed the importance of the underlying combined ratio, which Keese called the most critical measure of performance. With an underlying combined ratio of 79.1%, Lloyd’s has met its profitability threshold of 80% for three consecutive years. This resilience reassures policyholders and investors alike.
Lloyd’s return on capital for 2024 was 21%, a decrease from 25.3% in 2023. Over the past seven years, the average return on capital has been 7.6%, which Keese noted is below the expectations of investors. He emphasized the need for the company to achieve higher returns to attract and retain investment.
Looking ahead, both Keese and Neal expressed confidence that the market would not experience widespread rate decreases. They pointed to strong investor demand for better returns and the evolving nature of risks in the insurance landscape. Neal remarked that Lloyd’s is growing at three times the rate of global GDP, suggesting ample opportunities for underwriters to accept risks at appropriate prices.
In conclusion, the 2024 results reflect Lloyd’s strong financial health and commitment to disciplined underwriting. The company aims to continue delivering value to its stakeholders while navigating the challenges of the insurance market.